After National Downsizing, Caribou Growing Again In MN

After National Downsizing, Caribou Growing Again In MN

The coffee chain is now expanding where it began.

Minnesotans are provincial: They prefer doing business with people they know, like Brooklyn Center-based Caribou Coffee. But in April 2013, plans were announced to close 80 (mostly nonlocal) Caribous and rebrand another 88 under the banner of Peet’s Coffee & Tea; both are owned by the Germany-based JAB Group, which acquired Caribou for $340 million. “On August 31, we closed our last store that was part of the conversion strategy with Peet’s Coffee & Tea—a business decision that has best positioned us for growth,” says Mike Tattersfield, Caribou’s president and CEO. (Tattersfield has also been tapped as chairman of Einstein Bros. Bagels, another JAB acquisition.)

Caribou has opened 16 new stores since the consolidation announcement 18 months ago. The new coffee shops include 13 in Minnesota, two in Iowa and one in Colorado.

Today Caribou has 567 locations, including international franchises. In its stronghold of Minnesota, Caribou has 242 locations, a majority being stand-alone stores or skyway/mall operations. The company operates approximately 25 stand-alone stores in adjacent states and Colorado, making it a small bit player to Starbucks. (Starbucks has more than 11,000 U.S. locations, but ranks second to Caribou in Minnesota locations, with 130 outlets in the state.)

“Caribou was founded and started in Minneapolis. . . . They did a very, very good job of developing and penetrating and satisfying customers before Starbucks even entered the market,” says restaurant analyst Allan Hickok, a senior advisor for the Boston Consulting Group. (Another local player, Minneapolis-based Dunn Brothers Coffee, has 68 of its 84 locations in Minnesota.)

More competition is coming: Dunkin’ Donuts, a staple in the northeast United States, has big plans for Minnesota. Grant Benson, vice president of global franchise development for the Canton, Mass.-based Dunkin’ Brands Group, says the company envisions opening 50 locations in the Twin Cities over the next six to seven years.

“We are now actively engaged in franchisee selection for the Twin Cities,” says Benson. “The Minneapolis market is frankly one of the more competitive coffee markets in the country.”